Escondido is a hotbed of power plants

ESCONDIDO -- Escondido is clearly the place to be if you want to
build a power plant.

Like it or not, the city seems to have the necessary amenities
power plant developers are looking for to quickly develop large and
small power plants that can fight a lack of energy and soaring
electricity bills caused by the 1996 deregulation of the state's
utility companies.

"What you have in cities like Escondido is a confluence of
electrical transmission lines, power lines and available industrial
land," said Dale Mesple, the project manager for San Diego-based
Ramco Inc.

Ramco is building a 44-megawatt, natural gas-burning power plant
on private property in Escondido. The plant is expected to begin
operating in July.

Ramco is just one of three power plants in Escondido's future,
including a 500-megawatt power plant proposed by Sempra Energy
Resources to open in 2004. That plant could provide enough energy
to power half a million homes.

Other cities are a little behind Escondido. They're scrambling
now to find power plant proposals. Valley Center's Municipal Water
District is working with a developer and the existing Encina power
plant in Carlsbad is considering an on-site expansion.

Call it 'peaker'

Ramco's project is considered a "peaker" plant -- a plant that
produces less than 50 megawatts and operates during periods of high
energy demand. A single megawatt is enough electricity to power a
thousand homes.

Escondido is the only North County city with two "peaking" power
plants set to come in this summer, according said Rob Schlichting,
a spokesman for the state's energy commission.

The second peaker plant -- a 49.5-megawatt power plant being
developed by San Diego-based CalPeak Enterprises -- is slated to go
on 2.95 acres of vacant, industrial property on North Enterprise
Street in Escondido.

Its developer opted to bypass the traditional city permitting
process and use a new, 21-day fast-track state process to get the
power plant built sooner. Gov. Gray Davis has granted the state
commission emergency powers to permit natural gas-fired or
renewable peaking power plants so more small power plants can be in
operation by Sept. 30.

State officials are scrambling to increase supply to fight
escalating electricity prices caused by California's 1996
deregulation that has nearly bankrupted the state's two largest
utilities, Southern California Edison and Pacific Gas &
Electric Co. The companies have lost a combined $14 billion because
wholesale electricity costs have surpassed what customers pay under
a state-mandated rate freeze.

San Diego Gas & Electric Co. is not struggling as badly as
its northerly neighbors but had lost $747 million by the end of
March. The utility is hoping to recover the money by adding a
surcharge on customer bills of 2.3 cents per kilowatt hour or
another $11.50 per month for the average customer.

Land a necessity

Power plant developers need land fast to meet the deadline for
the state's fast-track program, which offers monetary incentives
for new power plants, Schlichting said.

"To be considered in the 21-day process, you need to have good
natural gas connections and sites that have no environmental
problems and complications," he said. "So sites next to an energy
substation or an existing power plant is best because it is not
unbroken ground."

Developers all agree that Escondido has amenities such as water,
sewer, natural gas and power available, especially in Quail Hills,
a vacant 200-acre parcel of land the city has been aching to
develop for 17 years.

Sempra Energy Resources filed preliminary plans in May to build
a 500-megawatt, natural-gas burning power plant and high-tech
industrial business park on Quail Hills.

Sempra Energy Resources is a branch of Sempra Energy that
develops power plants. Sempra Energy is the parent company of
SDG&E, the area's utility.

Quail Hills has natural gas pipes both north and south of the
property coming from existing industrial development, said Jonathan
Brindle, the city's assistant planning director.

The site also has access to water and sewer services and some
"limited infrastructure," Brindle added.

Escondido has much of the necessary infrastructure in place in
other parts of the city because the city has three power plants
already in operation, Brindle said. Escondido houses a
49.9-megawatt power plant called Goal Line, L.P. and two small
plants acquired in the 1920s and 1930s. One of the smaller plants
generates 1.6 megawatts, the other generates 0.3 megawatts.

Failed proposals

Officials from Goal Line had considered adding a 50-megawatt
power plant next to its existing power plant, which shares a
building with the Iceoplex ice-skating rinks in Escondido.

Plans have been usurped by financial problems stemming from the
state's electricity crisis, according to Jim Hinrichs, the plant's
manager. The plant's current 30-year contract with SDG&E is
forcing the company to earn half of what it costs to produce power,
and Hinrichs estimates the plant will be bankrupted in another
year.

Escondido city officials also stumbled in the power plant path.
The city spent months negotiating with private developers
interested in building a 49.9-megawatt power plant on one acre in
the city's public works yard at 901 W. Washington Ave.

Officials from the Hanover Co. of Houston and San Diego-based
California Power Partners ended talks in June.

Vista also explored building a small power plant. Congressman
Darrell Issa, R-Vista, advised the city to consider building a
peaker plant in February. Vista's officials explored the idea but
determined the city lacks a natural gas line big enough to make a
50-megawatt power plant feasible, they said.

Projects on the horizon

Valley Center is searching for a place to put a small power
plant, Valley Center Municipal Water District General Manager Gary
Arant told the board last month.

San Diego-based California Power Partners LLC approached the
board in April about finding land for a 49.9-megawatt power plant.
The developer proposed building the estimated $35 million to $40
million plant while giving the water district a long-term,
fixed-rate contract to buy power. The developers said they also
would consider a profit-sharing agreement with the district.

On the coast, the Encina power plant in Carlsbad is considering
an on-site expansion, said David Lloyd, the corporate secretary of
Cabrillo Power, which operates the Encina power plant in Carlsbad.
Cabrillo is a joint venture between NRG Energy Inc. and Dynegy
Inc., two energy giants.

"We are going through engineering analysis," he said. "We are
trying to determine how much we could expand and the costs."